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ATO set to issue early access to super tax arbitrage guidance

The Tax Office will soon be issuing guidance on the validity of a tax arbitrage scheme involving the government’s early access to superannuation measure.

Tax&Compliance Jotham Lian 15 June 2020
— 1 minute read

Accountants Daily understands the ATO is currently preparing guidance on the limited circumstances when an individual will be allowed to access some of their superannuation early before making salary-sacrificed super contributions to lower their taxable income.

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The tax arbitrage scheme, which made its rounds around the community in early April, had sparked concerns from tax experts, who warned of potential ATO scrutiny.

The material tax savings come from the 15 per cent tax on salary-sacrificed super contributions versus normal marginal rates of tax under ordinary income, and the eventual tax-free payments of the early super release.

Individuals would have had to prove they met at least one of the eligibility requirements, including seeing a reduction in working hours by 20 per cent or more, or seeing a reduction in turnover of 20 per cent or more as a sole trader.

It is understood that the ATO will indicate that the number of circumstances where they are comfortable with someone dipping into their super and later claiming a concessional tax-deductible contribution will be very limited.

Temporary early access to super was one of several changes made to superannuation as a part of the government’s second stimulus package to offset the economic effects of the coronavirus outbreak.

According to the ATO, it has now approved 1.9 million applications for early release of super, totalling $16 billion from superannuation funds.

Eligible individuals could apply for an early release of up to $10,000 in the 2019–20 financial year through the myGov website since 20 April.

A second payment of up to $10,000 will be available from 1 July 2020, and members will have until 24 September to apply.

ATO set to issue early access to super tax arbitrage guidance
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Jotham Lian

Jotham Lian

Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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